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Recently Adopted PERS Administrative Rules
Disability Application   
These rules provide specific timeframes for a member to file an application for a disability retirement (Tier One/Tier Two) or benefit (OPSRP). The member cannot apply before they stop working, but they are not required to be terminated from employment. The definitions for “date of disability,” “date of separation from service,” and “date of termination” in OAR 459-015-0001 were updated and incorporated into the disability rules in October 2011. Given the way the rule was structured, the incorporation of the updated definitions did not cover all possible employment/membership scenarios. The current modifications restructure the rule and incorporate the definitions in a manner intended to cover all likely employment/membership scenarios. The update to OAR 459-076-0020 incorporates the defined term “date of disability” in one place where it was missed in 2011 and makes other minor edits for clarification.
Board Adoption:                07/31/2015
Effective:                          07/31/2015
Text:                                459-015-0020
                                        PERS Board Adoption Memo    
Reemployment of OPSRP Retirees   
OPSRP Pension Program retired members who return to work for a PERS participating employer may continue to receive their pension payment so long as they are not working in a qualifying position, which is defined by ORS 238A.005(15) as “one or more jobs with one or more participating public employers in which an eligible employee performs 600 or more hours of service in a calendar year….” Under ORS 238A.245, when an OPSRP retired member works in a qualifying position, the retired member re-establishes active membership and PERS is required to stop their pension payments.
PERS has counted hours worked post-retirement separately from hours worked pre-retirement in the same calendar year when an OPSRP retired member returns to work. This practice was recently questioned during a review of ORS 238A.245: should hours worked in pre-retirement and post-retirement job segments be combined to count towards the 600 hours of the qualifying position, or can the hours worked post-retirement be counted separately? At the start of 2015, PERS informed employers that a narrow interpretation of the 600 hours standard would combine hours worked pre-retirement and post-retirement in the same calendar year for purposes of determining whether the 600 hours definition of a qualifying position had been met.
This direction was met with great concern by employers (and some members who had been informed by their employers), who requested that PERS review alternative interpretations and solutions to avoid such a result. The agency initiated this rulemaking to support a broader application of the statute that would allow hours worked by an OPSRP member pre-retirement to count separately from post-retirement hours. In reviewing the applicable administrative rules, we also discovered that OAR 459-080-0300, regarding reemployed members of the IAP, has not been updated since the institution of the “retire from one, retire from all” standard established in 2011. This rulemaking also includes the necessary modifications to properly align the IAP return to work standard with the member’s respective pension program and outlines the effect of the member returning to active membership on their IAP distributions.
Board Adoption:                07/31/2015
Effective:                          07/31/2015
Text:                                459-075-0300
                                        PERS Board Adoption Memo    
Benefit Payment Reductions/Deductions    
OAR 459-005-0600 establishes the order of priority for deductions, whether pre-tax or post-tax, from a monthly benefit. The rule has not been updated since 1998; PERS has experienced many changes since that time, so a number of rule modifications are necessary. The modifications clarify that, if a member is subject to the benefit limitation under Internal Revenue Code section 415 and must receive a portion of their monthly benefit from the Benefit Equalization Fund under ORS 238.485, such allocation of the member’s benefit payments takes precedence over all other payments. Deductions for administrable court orders, such as garnishments for restitution under ORS 238.447, have been added. And, finally, premium payments for PERS-sponsored health insurance were moved down in priority, as they are a voluntary deduction.
OAR 459-045-0070 is a new rule and establishes the order of priority for deductions, whether pre-tax or post-tax, from a member’s monthly benefit when a domestic relations order awards a portion of the member’s benefit to an alternate payee (AP). Such AP awards can be reductions (AP is responsible for the income tax on their portion of the benefit) or deductions (member is responsible for the income tax on the entire benefit, including the amount paid to the AP). The order of priority is slightly different for each of these scenarios and is broken out separately in the rule.
Finally, section (12) of OAR 459-005-0610 has been deleted because the order of precedence for recovery of an overpayment or an erroneous payment is addressed in both OAR 459-005-0600 and OAR 459-045-0070; therefore, this section of the rule is no longer necessary.
Board Adoption:                05/29/2015
Effective:                          05/29/2015
Text:                                459-005-0600
                                        PERS Board Adoption Memo    
IRC and Social Security Limitations
The Internal Revenue Service (IRS) revises various dollar limits annually based on cost-of-living adjustments. These revisions are used throughout the PERS plan’s statutes and rules, but revisions to the limits must be adopted by the legislature or PERS Board to be effective.
The rule modifications incorporate these federal adjustments and are necessary to ensure compliance with the IRC’s limits on the amount of annual compensation allowed for determining contributions and benefits, annual benefits, and annual additions to PERS.
Also, under ORS 238.082, a Tier One or Tier Two retired member who is receiving Social Security benefits and who returns to PERS-covered employment may continue to receive their PERS retirement benefits so long as they work less than 1,040 hours or do not exceed any related Social Security annual compensation limits. The modifications to OAR 459-017-0060 adopt the 2015 Social Security earnings limitations. For these increases to be effective, the PERS Board has to adopt these rule modifications.
Board Adoption:                05/29/2015
Effective:                          05/29/2015
Text:                                459-005-0525
                                        PERS Board Adoption Memo
IAP Earnings Crediting      
OAR 459-007-0320 and 459-007-0330 outline how earnings are credited to distributions from the IAP. Lump sum distributions from the IAP are credited with the latest year-to-date calculation as of the date of distribution; IAP accounts of retired members electing installment payments are credited with the latest year-to-date calculation as of the date of the initial distribution. The latest year-to-date calculation is determined on a monthly basis, as defined in OAR 459-007-0001. The rule change clarifies that the monthly latest year-to-date calculation is applied on a calendar month basis, so all distributions made in the same month will receive the same earnings crediting rate. This revision is a clarification; there is no change in our administration of the IAP.
One of the retirement options for the IAP is the Anticipated Life Span Option. This option employs a distribution method approved by the Internal Revenue Service (IRS) intended to establish substantially equal payments to retired members, which is an exception to the additional 10 percent tax on early distributions. The IRS approved method requires an annual recalculation of the member’s account to determine the distribution(s) for the following year. This annual recalculation is done on the member’s anniversary date, currently defined in OAR 459-080-0250 as the first of the month following the initial distribution. The current definition of anniversary date causes the annual recalculation to fall out of sync with the timing of the distribution(s). For example, a member electing to receive annual installments would receive the second annual installment one month before the annual recalculation. The rule change establishes the anniversary date as the first day of the month of the date of distribution, bringing the annual recalculation in line with the timing of the distributions.
Board Adoption:               03/30/2015
Effective:                         03/30/2015
Text:                               459-007-0320
                                      PERS Board Adoption Memo

PHIP Dental Insurance Program
Retired members who are eligible to enroll in PHIP are also eligible to enroll in PERS dental insurance. A retired member must enroll in PHIP to be eligible to enroll in the dental program and is only eligible to enroll in the dental program at the same time as PHIP. If a retired member discontinues participation in the dental insurance program, that member can only re-enroll in the dental insurance program during an available enrollment period and subject to the same qualifications. The rule modifications clarify that the enrollment requirements are the same for both the health insurance and dental insurance programs.
Board Adoption:                03/30/2015
Effective:                          03/30/2015
Text:                                459-035-0070
                                       PERS Board Adoption Memo


Allocating Costs of Compliance with Generally Accepted Accounting Principles
OAR 459-007-0009 was adopted by the PERS Board on July 25, 2014, as authorized by House Bill 4155 (2014) (now codified in ORS 238.610). The rule establishes procedures for recovering the additional actuarial and auditing costs associated with providing employers information necessary to comply with the new GASB 68 requirements. 

The last sentence of OAR 459-007-0009(2) needs to be clarified. As previously adopted, the permanent rule states: "In any year in which earnings on those accounts are not sufficient to recover those costs, employer contribution accounts will be reduced by the amount of those costs." Although ORS 238.610(1)(a) allows for administrative expenses to be deducted from employer accounts, (1)(b) specifically says that administrative costs may be recovered "only from interest earned on employer contributions..." The statute does not specifically allow employer accounts to be reduced. Rather, in practice, there are always earnings throughout the year even though there may be a net loss for a particular year. These GASB 68 costs will be deducted from these employer earnings pror to netting all earnings and losses for the calendar year.

The modifications were adopted as a temporary rule by the Board at the November 21, 2014 meeting, because the rule needed to be in effect before the end of the calendar year for earnings crediting purposes. This item is to adopt the same modifications as a permanent rule.

Board Adoption:                   01/30/2015
Effective:                             01/30/2015
Text:                                   459-007-0009
                                          PERS Board Adoption Memo


Definition of Service
Generally, to be eligible for OPSRP benefits, a person must provide services to a participating PERS employer. ORS 238A.005(7)(b) defines "hour of service" as excluding any hour for which payment is made under a plan maintained solely for the purposes of complying with applicable workers' compensation laws or unemployment compensation laws. However, OAR 459-070-0001(19)(b) currently provides that "service" means a period in which an employee receives a payment of "salary," as defined in ORS 238A.005 or similar payment from workers' compensation or disability. This language is inconsistent with the statute, and the proposed rule modification removes the inconsistent language.

Board Adoption:                   01/30/2015
Effective:                             01/30/2015
Text:                                   459-070-0001
                                          PERS Board Adoption Memo